A New Weekly Column with Liz Young
Liz Young is SoFi’s Head of Investment Strategy, responsible for providing economic and market insights. Liz is passionate about educating others on markets and investing in order to help people feel empowered to take a more active role in their financial futures. This week, see what Liz has to say about the economic recovery post COVID-19.
Ready, Set, Recover!
We are slowly, but surely, making welcome progress toward a reopened economy. Our lives as consumers may look different than they were pre-pandemic, but they will undoubtedly include more activity and mobility. Spring and summer will be a critical time for our economy and markets to make this transition, and I am optimistic that the ultimate outcome will be one of strong growth, healthy demand, and happier times.
Naturally, as we make this pivot, markets will have to reassess where the new opportunities are, both short term and long term. What’s going to win in the next phase? The typical answer you’ll hear is “cyclicals,” but what exactly does that mean? Cyclicals are sectors of the market that generally follow the path of the economy. They tend to do well when the economy expands and not so well when the economy contracts or goes into recession. Specifically, sectors such as financials, industrials, energy, materials, and consumer discretionary would fall into that camp. This is the opportunity set that’s immediately in front of us as we watch the economy come back to life.
But let’s not stop there. This recession was unique and this recovery will be unique. It accelerated digitization and made all of us even more reliant on technology. So although technology is not a traditional cyclical sector, I believe it’s a bigger risk not to be invested in tech for the long term. I also believe in innovation and the continued growth of digital consumer experiences. Your patience may be tried as the market transitions and as interest rates rise, which can cause some bumps in tech stocks, but the staying power and ever-increasing need for technology is not something I’d bet against.
-Liz Young, Head of Investment Strategy at SoFi
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